Cannabis Cash: How Much Money Could Your State Make From Marijuana Legalization?

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Colorado, the first state to allow the sale of recreational marijuana, is expected to take in $60 million to $70 million this year in taxes from legal pot sales, according to the Denver Business Journal. Across the U.S., states could gain just over $3 billion in tax revenue from legal marijuana sales, according to a new analysis by NerdWallet. What’s your state’s piece of the pie?

Trends and takeaways

The U.S. stands to gain, according to our calculations, $3,098,866,907 in state and local taxes per year — that’s more than twice the entire budget of the Small Business Administration in 2013.

California could gain the most from taxes on sales of marijuana. The state stands to take in $519,287,052, which almost covers the 2013 budget for the California Department of Parks and Recreation.

How we sized the marijuana market

Marijuana use is illegal in most states, so it’s difficult to get concrete numbers on the amount of marijuana purchased and consumed. To estimate this value, we used data from the Substance Abuse and Mental Health Services Administration detailing the percentage of marijuana smokers ages 25 and over in each state and multiplied that percentage by the state’s population older than 25 to get the number of users in each state. We then took the state’s users as a percentage of total users over 25 in the U.S. and multiplied that by the total marijuana market estimate (sized at $14 billion by Harvard University economist Jeffrey Miron) to determine the market size in each state.

We used state and local tax rates compiled by the nonpartisan Tax Foundation to estimate the amount each state would earn in sales tax revenue. We added in a 15% excise tax (a tax levied on a specific good, such as cigarettes or gas), which is the excise tax in Colorado for marijuana purchases. For the full formula, see the bottom of this article.

How much has Colorado made since legalizing marijuana? In the first six months of this year, the state collected $25,307,067 in taxes on the sales of marijuana. By June 2015, Colorado expects to collect up to $70 million—not very far off from our estimate of $78,157,904. Take a look at the chart to see how much each state could collect per year in sales taxes if the recreational and medical use of marijuana was made legal.

Interested in future NerdWallet studies? Click here to have updates sent directly to your inbox.

How much money each state could make

Scroll right to see all categories.

State

Population age 25 and older

Population over 25 who has smoked marijuana in the past month

Number of marijuana smokers

State's percentage of U.S. marijuana market

Marijuana market size

Combined sales tax rate (state and local)

Excise tax rate

Revenue from sales and excise tax

Alabama

3,209,646

3.38%

108,486

1.03%

$144,086,238

8.51%

15%

$33,874,675

Alaska

464,594

11.18%

51,942

0.49%

$68,986,493

1.69%

15%

$11,513,846

Arizona

4,280,464

5.33%

228,149

2.16%

$303,016,813

8.17%

15%

$70,208,995

Arkansas

1,949,382

3.61%

70,373

0.67%

$93,465,820

9.19%

15%

$22,609,382

California

24,779,784

6.74%

1,670,157

15.84%

$2,218,227,477

8.41%

15%

$519,287,052

Colorado

3,444,654

7.63%

262,827

2.49%

$349,075,052

7.39%

15%

$78,157,904

Connecticut

2,457,978

6.01%

147,724

1.40%

$196,200,961

6.35%

15%

$41,888,905

Delaware

618,612

4.95%

30,621

0.29%

$40,669,816

0.00%

15%

$6,100,472

District of Columbia

439,531

7.24%

31,822

0.30%

$42,264,598

5.75%

15%

$8,769,904

Florida

13,503,747

4.73%

638,727

6.06%

$848,328,585

6.62%

15%

$183,408,640

Georgia

6,403,838

3.88%

248,469

2.36%

$330,005,160

6.97%

15%

$72,502,134

Hawaii

952,281

5.69%

54,185

0.51%

$71,965,783

4.35%

15%

$13,925,379

Idaho

1,012,786

3.77%

38,182

0.36%

$50,711,646

6.03%

15%

$10,664,659

Illinois

8,558,895

4.79%

409,971

3.89%

$544,505,009

8.16%

15%

$126,107,360

Indiana

4,278,945

4.31%

184,423

1.75%

$244,941,652

7.00%

15%

$53,887,163

Iowa

2,036,993

4.13%

84,128

0.80%

$111,734,749

6.78%

15%

$24,335,828

Kansas

1,863,224

2.55%

47,512

0.45%

$63,103,568

8.15%

15%

$14,608,476

Kentucky

2,935,461

3.65%

107,144

1.02%

$142,304,242

6.00%

15%

$29,883,891

Louisiana

3,006,605

3.02%

90,799

0.86%

$120,595,745

8.89%

15%

$28,810,324

Maine

947,017

6.29%

59,567

0.57%

$79,114,682

5.50%

15%

$16,218,510

Maryland

3,972,135

3.66%

145,380

1.38%

$193,087,319

6.00%

15%

$40,548,337

Massachusetts

4,556,609

6.34%

288,889

2.74%

$383,689,301

6.25%

15%

$81,533,976

Michigan

6,621,018

6.61%

437,649

4.15%

$581,265,967

6.00%

15%

$122,065,853

Minnesota

3,600,744

4.33%

155,912

1.48%

$207,075,543

7.19%

15%

$45,950,063

Mississippi

1,911,968

3.88%

74,184

0.70%

$98,528,305

7.00%

15%

$21,676,227

Missouri

4,023,641

3.83%

154,105

1.46%

$204,675,880

7.58%

15%

$46,215,814

Montana

686,770

7.94%

54,530

0.52%

$72,423,663

0.00%

15%

$10,863,549

Nebraska

1,206,908

3.74%

45,138

0.43%

$59,950,724

6.79%

15%

$13,063,263

Nevada

1,840,642

6.44%

118,537

1.12%

$157,435,933

7.93%

15%

$36,100,059

New Hampshire

919,883

5.41%

49,766

0.47%

$66,096,510

0.00%

15%

$9,914,476

New Jersey

6,049,352

3.96%

239,554

2.27%

$318,165,225

6.97%

15%

$69,900,900

New Mexico

1,360,330

6.94%

94,407

0.90%

$125,386,972

7.26%

15%

$27,911,140

New York

13,309,761

5.98%

795,924

7.55%

$1,057,109,824

8.47%

15%

$248,103,676

North Carolina

6,489,883

4.24%

275,171

2.61%

$365,469,713

6.90%

15%

$80,037,867

North Dakota

457,904

3.07%

14,058

0.13%

$18,670,738

6.55%

15%

$4,023,544

Ohio

7,770,716

5.39%

418,842

3.97%

$556,286,435

7.11%

15%

$122,994,931

Oklahoma

2,487,456

4.55%

113,179

1.07%

$150,319,552

8.72%

15%

$35,655,798

Oregon

2,671,772

10.25%

273,857

2.60%

$363,723,974

0.00%

15%

$54,558,596

Pennsylvania

8,756,317

4.20%

367,765

3.49%

$488,449,235

6.34%

15%

$104,235,067

Rhode Island

712,271

9.74%

69,375

0.66%

$92,140,993

7.00%

15%

$20,271,018

South Carolina

3,151,616

5.15%

162,308

1.54%

$215,570,433

7.19%

15%

$47,835,079

South Dakota

544,292

4.28%

23,296

0.22%

$30,940,291

5.83%

15%

$6,444,863

Tennessee

4,336,473

3.81%

165,220

1.57%

$219,437,219

9.45%

15%

$53,652,400

Texas

16,390,379

3.30%

540,883

5.13%

$718,375,651

8.15%

15%

$166,303,963

Utah

1,641,335

3.04%

49,897

0.47%

$66,270,383

6.68%

15%

$14,367,419

Vermont

434,948

9.34%

40,624

0.39%

$53,955,147

6.14%

15%

$11,406,118

Virginia

5,504,766

3.44%

189,364

1.80%

$251,504,623

5.63%

15%

$51,885,404

Washington

4,645,859

8.11%

376,779

3.57%

$500,421,024

8.88%

15%

$119,500,540

West Virginia

1,296,201

3.29%

42,645

0.40%

$56,639,175

6.07%

15%

$11,933,874

Wisconsin

3,854,170

4.65%

179,219

1.70%

$238,030,433

5.43%

15%

$48,629,618

Wyoming

380,942

4.36%

16,609

0.16%

$22,059,416

5.49%

15%

$4,519,974

Total U.S.

208,731,498

5.05%

10,540,941

N/A

$14,000,000,000

N/A

N/A

$3,098,866,907

Methodology

The formula used to calculate the state revenue is as follows:

State market size = % smokers in state* state population/total users in U.S. * $14 billion

Tax rate = state and local taxes + excise tax of 15%

Revenue from sales and excise tax = state market size * tax rate.

NerdWallet’s estimates are conservative. This analysis doesn’t account for several factors, including:

Variations in excise taxes: Each state will determine its own taxes, but for our calculations, we assumed the same 15% excise tax that Colorado collects across all states.

Reduced spending on law enforcement: We didn’t include the money states would save by not having to enforce laws against the use of marijuana. Miron, the Harvard economist, estimates a savings of $7.7 billion annually nationwide on law enforcement.

Medical marijuana sales: We didn’t deduct the amount of revenue raised in states that have legalized medical marijuana. The total revenue we calculated for California, for example, includes revenue they already make from medical marijuana sales.

Potential market changes: If marijuana becomes legal for wider recreational use, consumption could increase, which would make our current market estimates low.

More from NerdWallet

We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines, and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet's official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.

Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.